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Sun changes course, burning thousands

Posted: 17 Nov 2008 ?? ?Print Version ?Bookmark and Share

Keywords:reduction global workforce? reorganization change?

By John Murrell
Good Morning Silicon Valley

From the first sentence of the press release, you almost thought they were announcing good news: "Sun Microsystems Inc. today announced a series of changes designed to align its cost model with the global economic climate and accelerate the introduction of compelling open source innovations." But then came "As part of this effort, Sun is announcing a global workforce reduction," and the picture became both darker and clearer.

Already struggling before the economy did a cliff dive and facing increasingly impatient shareholders, Sun said it plans to lay off 5,000 to 6,000 employees, more than 15 percent of its global workforce, over the next year. CEO Jonathan Schwartz gave no breakdown on where the blood will be shed, but said, "Clearly we are going to be moving resources toward fast-growing parts of the world and probably lightening our resources in parts of the world where we're seeing the economy contract." One confirmed departure is Rich Green, Sun's executive vice president for software since 2006, who saw his territory carved up and redistributed under the reorganization that is accompanying the layoffs. The new structure is built on platformsthree business groups defined as Application Platform Software, Systems Platforms, and Cloud Computing & Developer Platforms. Schwartz said the new structure will help the company build systems that integrate hardware and software, and help sell those systems to business customers who use its popular software, including Java and MySQL.

The news comes fresh on the heels of cuts in the chip industry and across the tech landscape, adding to a casualty list that, according to outplacement firm Challenger, Gray & Christmas, is on pace to be the worst in five years. A new report from Challenger says that through October 31, job cuts by firms in the telecommunications, electronics and computer industries totaled 140,422, already 31 percent more than in all of last year. At this rate, the 2008 layoff tally could reach 180,000, the most since 228,325 tech jobs disappeared in 2003. "By the end of the year, we may also see cuts from Cisco Systems, Qualcomm and Nokia, all of whom are reporting falling sales amid the weakening economy," said CEO John A. Challenger. "The tech sector is simply the latest victim in this downturn that began last year with the collapse of the housing market, and quickly spread to the financial markets. Since then, the impact has rippled throughout the economy and job cuts have surged in several industries, including retail, transportation, media, entertainment and leisure, automotive and even health care. Businesses and consumers have slashed their spending and no industry is immune."

- John Murrell is part of the Silicon Valley.com blogger community.





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